Colorado’s economy continued to expand in February, according to the Goss Business Conditions Index released today.

The overall index for February climbed to 59.1 from January’s 57.5.

Components of the Business Conditions Index for February were new orders at 59.1, production or sales at 60.1,delivery lead time at 52.2 inventors at 63.2 and employment at 59.4.

Dr. Ernie Goss, research director for the Goss Institute for Economic Research, said that in Colorado “non-durable manufacturers’s business activity bounced higher for the month.

“On the other hand, durable goods producers, including metal manufacturers, reported only tepid growth for the month,” said Goss.

An index value greater than 50 indicates economic expansion, while a value lower than 50 indicates contraction. But Goss warned that the inflation gauge indicates rising wholesale inflationary pressures in Colorado and throughout the region.

The Business Conditions Index found that for the 28th straight month, the overall index for the Mountain States region, a leading economic indicator for the the three-state area of Colorado, Utah and Wyoming, advanced above 50.

“Even though growth has been especially strong for firms tied to energy and agriculture, our surveys indicate that growth has spilled over into a broad range of industries across the region,” said Goss. “The Federal Reserve’s cheap money policy continues to boost the prospects of firms selling in international markets.”

Goss said that surveys of supply managers in the region point to a healthy job growth for the first half of 2012.

However, he noted that half of the supply managers indicated that higher energy prices posed the biggest risk for the regional economy.

“The risk has risen to levels we have not seen since 2008,” said Goss.”With the Federal Reserve pledging to keep interest rates low, the U.S. dollar will continue its long term slide.’

He added, however, this will continue to push energy commodity prices higher and make U.S. goods more competitively priced abroad, assisting exports.”

But Goss said that the prices-paid index, which tracks the cost of raw materials and supplies, expanded to 74.8 from January’s already inflationary 73.9.

“Given the excessive inflationary pressures we are tracking in our survey and vigorous economic growth expected in the months ahead, I think the Federal reserve will have to violate their pledge to keep short term interest rates at their current record lows until 2014,” said Goss.

In the region, the February employment index advanced to 61.2 from January’s health 57.2.

Goss said he asked supply managers to assess layoff expectations for 2012 and only five percent expected layoffs in 2012.